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Dead rat in hotpot report sends China restaurant shares sliding

 [HONG KONG] A Chinese restaurant operator is in hot water after local media reported that a customer discovered a dead rat in a meal.

Shares of Xiabuxiabu Catering Management China Holdings Co. tumbled 11 percent in Hong Kong on Tuesday, extending Monday's 6.1 per cent decline. Authorities in Weifang city, in east China's Shandong province, are conducting food safety checks at one of Xiabuxiabu's restaurants there. Local website Weifang.sdnews.com reported after the market closed Friday that a customer found the rat in a hotpot meal on Sept. 6.

In a Sept. 8 statement on social media site Weibo, Xiabuxiabu said its own preliminary investigation ruled out the possibility the rat ended in the meal due to restaurant hygiene or operational reasons. The statement has since been deleted. Authorities have ordered the restaurant to suspend operations, according to a statement on their official WeChat account, which also said the restaurant faces penalties, without elaborating.

While there's never a good time to find a rat in your meal, this comes just as Xiabuxiabu becomes eligible for trading by mainland investors via the stock connect link between Shenzhen and Hong Kong. The Shenzhen Stock Exchange announced the changes on Monday.

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Xiabuxiabu's shares have now tumbled 16 percent since Monday morning, their biggest two-day loss since July 2015. The company didn't immediately respond to a request for comment.

BLOOMBERG